Brazan v. Lamorak Insurance Co.

United States District Court, E.D. Louisiana

July 26, 2018

JOSEPH BRAZANv.LAMORAK INSURANCE CO., et al.

SECTION:
“G” (2)

ORDER AND REASONS

NANNETTE JOLIVETTE BROWN, UNITED STATES DISTRICT CHIEF JUDGE

Pending
before the Court is Plaintiff Joseph Brazan's
(“Plaintiff”) “Motion to
Remand.”[1]Having considered the motion, the memoranda
in support and in opposition, the record, and the applicable
law, the Court will grant Plaintiff's motion in part and
remand the case to the Civil District Court for the Parish of
Orleans, State of Louisiana and deny Plaintiff's motion
in part to the extent that Plaintiff's requests costs,
attorneys' fees, and sanctions.

I.
Background

In this
case, Plaintiff alleges he contracted malignant mesothelioma
as a result of exposure to asbestos products at various
worksites from 1960 through 1979.[2] On September 29, 2017,
Plaintiff filed a petition for damages in the Civil District
Court for the Parish of Orleans against twenty
defendants.[3] On July 23, 2018, according to Defendants
Union Carbide Corporation (“Union Carbide”) and
Bayer CropScience, Inc. Bayer CropScience, Inc., as Successor
to Rhone-Poulenc AG Company, f/k/a Amchem Products, Inc.,
f/k/a Benjamin Foster Company's (“Amchem”)
(collectively, “Removing Defendants”) Notice of
Removal, Plaintiff settled with all remaining parties, except
for Removing Defendants.[4]

On the
same date, Removing Defendants filed a notice of removal,
whereby Removing Defendants allege there exists complete
diversity, as “Plaintiff, by his voluntary act, has
definitely and clearly indicated his intention to abandon or
discontinue his action against all non-diverse defendants,
” and the amount in controversy exceeds $75,
000.[5]
On July 23, 2018, Plaintiff filed the instant motion to
remand, arguing that a nondiverse defendant still remains in
this case, which destroys complete diversity.[6] Plaintiff also
filed an “Ex Parte Motion for Expedited Hearing,
”[7]which the Court granted, setting the motion
to remand for submission on July 26, 2018.[8] On July 25, 2018,
Removing Defendants filed an opposition to Plaintiff's
motion.[9] On July 25, 2018, Plaintiff filed a reply
in further support of Plaintiff's motion to
remand.[10]

II.
Parties' Arguments

A.
Plaintiff's Arguments in Support of Remand

In the
motion to remand, Plaintiff argues that the instant case
should be remanded because complete diversity does not exist
between the parties.[11] Plaintiff asserts that Reilly-Benton
Company, Inc. (“Reilly-Benton”), a Louisiana
citizen, remains a nondiverse defendant in this
case.[12] According to Plaintiff, Reilly-Benton
filed for bankruptcy after Plaintiff filed suit, meaning all
claims asserted against Reilly-Benton are subject to an
automatic stay.[13] Moreover, Plaintiff asserts that he has
not voluntarily dismissed Reilly-Benton from the
case.[14] Plaintiff contends that two other
sections of this Court, in Poche v. Eagle, Inc. and
Bourke v. Exxon Mobil Corp., have previously
determined that an automatic stay does not result in the
dismissal of a defendant for purposes of establishing
diversity jurisdiction.[15] Plaintiff further asserts that costs,
attorney's fees, and sanctions against Removing
Defendants are warranted in this case, considering Removing
Defendants removed the case “on the day a living
mesothelioma victim's trial was set to
begin.”[16]

B.
Removing Defendants' Arguments In Opposition to
Remand

In the
opposition, Removing Defendants make three primary arguments
as to why removal of this matter is
appropriate.[17] As a threshold matter, Removing
Defendants note that Plaintiff's reliance on
Poche and Bourke is misplaced, as Removing
Defendants contend that they are not asserting that
Reilly-Benton's citizenship should be ignored because of
its bankruptcy status.[18]Instead, Removing Defendants assert
that Reilly-Benton's citizenship should be disregarded
for the purpose of determining diversity jurisdiction for the
following reasons.[19] First, Removing Defendants argue that
Plaintiff voluntarily discontinued his claim against
Reilly-Benton “by electing to proceed to trial against
only Union Carbide and Amchem.”[20] Second,
Removing Defendants argue that to the extent Reilly-Benton
remains in this case, it would be as a nominal defendant and
its citizenship would be disregarded for the purposes of
determining diversity jurisdiction.[21] Third, Removing
Defendants argue that Reilly-Benton was improperly joined,
contending that there is no reasonable possibility that
Plaintiff could recover against Reilly-Benton at
trial.[22] Removing Defendants also contend that
Plaintiff's request for Rule 11 Sanctions should be
denied, as Removing Defendants' removal was supported by
both the law and the facts of this case.[23]

Regarding
Removing Defendants' first argument, they aver that the
instant case became removable on July 23, 2018, because
Plaintiff's “voluntary acts” demonstrate
Plaintiff's intent to discontinue the action against the
nondiverse Defendant, Reilly-Benton.[24] Removing Defendants argue
that Plaintiff's counsel stated in open court on July 23,
2018 that the only remaining defendants in this case were
Union Carbide and Amchem.[25] Removing Defendants contend
that “Plaintiff ‘definitely and clearly'
indicated his intention to abandon or discontinue his action
as to all other Defendants, including Reilly-Benton, by
choosing to proceed to trial against only Union Carbide and
Amchem.”[26] Removing Defendants further argue that
Plaintiff did not include Reilly- Benton as a party in his
pretrial inserts, did not mention Reilly-Benton in
Plaintiff's proposed jury interrogatories, and did not
ask its expert witness to offer an opinion on
Reilly-Benton.[27] Removing Defendants contend that
Reilly-Benton did not need to be formally dismissed by
Plaintiff, but rather that the Plaintiff merely needs to
demonstrate a voluntary discontinuance of the action towards
the nondiverse defendant.[28] Removing Defendants also argue
that even if Plaintiff contends that Plaintiff's counsel
erred in speaking in state court, those statements would
still be binding on Plaintiff.[29]

Next,
Removing Defendants contend that to the extent that
Reilly-Benton remains a defendant in this case, its status
would be nominal and its citizenship should be disregarded
for the purposes of diversity jurisdiction.[30] Removing
Defendants contend that it is well established that a nominal
defendant does not need to be diverse from the plaintiff for
the purposes of removal and that a defendant is considered
nominal when a “plaintiff, through his own voluntary
acts, expresses an intent to effectively terminate or abandon
his claim against a defendant.”[31] Based on the
actions of Plaintiff's counsel discussed above, Removing
Defendants assert that Plaintiff voluntarily discontinued his
case against Reilly-Benton.[32]

Last,
Removing Defendants argue that Plaintiff improperly joined
Reilly-Benton as there is no reasonable possibility that
Plaintiff could recover from Reilly-Benton at
trial.[33] Removing Defendants contend that
Plaintiff's petition asserts vague claims against
Reilly-Benton and contains only bare-bones allegations
against Reilly-Benton that could not survive 12(b)(6)
scrutiny.[34] Furthermore, Removing Defendants assert
that the Court should “pierce the pleadings” and
consider evidence Removing Defendants submitted to meet its
“heavy burden” in showing that Reilly-Benton was
improperly joined.[35]

C.
Plaintiff's Arguments in Reply in Further Support of
Plaintiff's Motion to Remand

In the
reply, Plaintiff asserts that he did not voluntarily
discontinue or abandon his claims against Reilly-Benton, that
Reilly-Benton is not a nominal defendant, and last that
Reilly-Benton was not improperly joined.[36] First,
Plaintiff contends that he did not voluntarily discontinue
his claims against Reilly-Benton because Plaintiff did not
settle with Reilly-Benton and Plaintiff did not choose for
the automatic stay to come into effect and preclude Plaintiff
from prosecuting its case against
Reilly-Benton.[37] Plaintiff contends that he did not
voluntarily discontinue his case against Reilly-Benton on
July 23, 2018, in state court, and that Removing Defendants
did not quote the part of the hearing transcript, where
Plaintiff's counsel identified the defendants who were
part of the settlement agreement, which did not include
Reilly-Benton.[38] Further, Plaintiff contends that counsel
for Plaintiff noted in open court that Plaintiff was
“reserving our rights against all
others.”[39] Plaintiff asserts that Removing
Defendants' arguments as to the Plaintiff's jury
interrogatories, expert report, and pretrial inserts are
unpersuasive, as Plaintiff was precluded from proceeding
against Reilly-Benton because of the automatic bankruptcy
court stay.[40]

Next,
Plaintiff contends that Reilly-Benton is not a nominal
defendant because at no point did Plaintiff voluntarily
abandon his claim against Reilly-Benton.[41] Plaintiff
further argues that he expects that Reilly-Benton's
bankruptcy proceedings will eventually be dismissed and
Plaintiff will be able to proceed against Reilly-Benton in
state court.[42]

Last,
Plaintiff asserts that Reilly-Benton was not improperly
joined.[43] Plaintiff first notes that Reilly-Benton
was clearly not added as a “straw-man” to defeat
diversity jurisdiction, as at least four other defendants
were Louisiana citizens at the time Plaintiff filed the
petition for damages in state court.[44] Plaintiff proceeds to
identify evidence that Plaintiff alleges shows that Plaintiff
can succeed in his claims against Reilly-Benton in state
court.[45] Plaintiff also argues that under
Louisiana law, “fault of a bankrupt party cannot go
before the jury.”[46]

III.
Applicable Legal Standard

A
federal court has subject matter jurisdiction over an action
“where the matter for controversy exceeds the sum or
value of $75, 000” and the action “is between
citizens of different states.”[47] “When removal is
based on diversity of citizenship, the diversity must exist
at the time of the removal.”[48] The removing party bears
the burden of demonstrating that federal jurisdiction
exists.[49] In assessing whether removal was
appropriate, the Court is guided by the principle, grounded
in notions of comity and the recognition that federal courts
are courts of limited jurisdiction, that “removal
statute[s] should be strictly construed in favor of
remand.”[50] Remand is appropriate if the Court lacks
subject matter jurisdiction, and “doubts regarding
whether removal jurisdiction is proper should be resolved
against federal jurisdiction.”[51]

When a
case is removed on the basis of diversity jurisdiction, the
case must have been removable at the time it was filed in
state court;[52] however, even when a case is initially
nonremovable, it may later become removable through the
dismissal of all nondiverse parties.[53]While the dismissal of the
nondiverse parties does not need to be a formal judgment of
dismissal, it must be certain.[54] For example, a settlement is
considered certain when it is enforceable according to the
applicable state law.[55] However, there is an additional
requirement, because a case “that is non-removable on
its initial pleadings can only become removable pursuant to a
voluntary act of the plaintiff, ” such as a decision to
enter into a settlement.[56] A case is not considered removable,
if the nondiverse defendant was dismissed by means
involuntary to the plaintiff, such as a motion for summary
judgment.[57]

When
considering whether the diversity requirement has been met,
only the citizenship of “real” parties in
interest are relevant, as the joinder of nominal parties
cannot prevent removal.[58]A nominal party is one who the
plaintiff could not reasonably establish a cause of action
against.[59]

Last,
when a district court remands a case, the court has the
discretion to award attorneys' fees incurred as a result
of removal to the non-removing party, but the court should
decline to do so if the removing party had an
“objectively reasonable basis for
removal.”[60]

IV.
Analysis

A.
Motion To Remand

Removing
Defendants argue that Reilly-Benton's Louisiana
citizenship should not be considered for purposes of
diversity, contending that Plaintiff voluntarily discontinued
his case against Reilly-Benton. Plaintiff asserts that he has
not dismissed Reilly-Benton from this case and
Plaintiff's current inability to further prosecute the
case against Reilly-Benton was not voluntary, but rather a
result on the automatic stay put in place once Reilly-Benton
filed for bankruptcy.

The
parties do not contest that Reilly-Benton is a citizen of
Louisiana, as Reilly-Benton is incorporated under Louisiana
law and has its principal place of business in Louisiana.
Removing Defendants do not argue that Reilly-Benton's
citizenship should not be considered because of its
bankruptcy, but rather argue that in state court, on July 23,
2018, Plaintiff discontinued its case against Reilly-Benton,
when Plaintiff's counsel stated that the only remaining
defendants in this case, after settlement, were Amchem and
Union Carbide. Removing Defendants further argue that
Plaintiff demonstrated his intent to discontinue his case
against Reilly-Benton because Plaintiff did not address
Reilly-Benton in Plaintiff's proposed jury
interrogatories, pretrial inserts, or expert reports.

In
rebuttal, Plaintiff points to the portion of the state court
transcript, on July 23, 2018, where Plaintiff specifically
identified the settled parties, which did not include
Reilly-Benton, and reserved his right to his claims against
“all others.” Further, Plaintiff contends he has
not taken further action against Reilly-Benton, such as
including Reilly-Benton in his jury interrogatories, pretrial
inserts, or the testimony of its expert witness, because
Plaintiff is precluded from proceeding against Reilly-Benton
due to the automatic stay in place as a result of
Reilly-Benton filing for bankruptcy.

As
explained above, a case “that is non-removable on its
initial pleadings can only become removable pursuant to a
voluntary act of the plaintiff, ” such as a
settlement.[61] Removing Defendants attempt to ignore
the fact that Reilly-Benton is in bankruptcy and that
pre-bankruptcy petition claims against Reilly-Benton, such as
the instant suit, are barred under the automatic stay, with
resulting penalties and punitive damages. The cases relied on
by Removing Defendants, where the plaintiffs took voluntary
acts to discontinue claims against nondiverse defendants,
Heniford v. American Motorists Sales Corp.[62] and
Erdey v. Am. Honda Co., [63] are clearly
distinguishable, as neither of those cases involved a
defendant in bankruptcy, where an automatic stay precluded
further prosecution of a claim.

Furthermore,
Plaintiff points to excerpts of the transcript of a hearing
held in state court on July 23, 2018, where Plaintiff's
counsel identified the parties with whom Plaintiff settled,
which did not include Reilly-Benton, and where Plaintiff
reserved his rights against all other Defendants. Thus,
Plaintiff has not voluntarily discontinued his case against
Reilly-Benton, but instead Plaintiff's inability to
prosecute his case against Reilly-Benton was caused by the
effect of the automatic stay, and not by any voluntary acts
of Plaintiff.

Removing
Defendants make the same arguments they made regarding
Plaintiff's alleged “voluntary”
discontinuance of his case against Reilly-Benton for why
Reilly-Benton should be considered a nominal defendant and
not considered for the purposes of diversity jurisdiction.
Removing Defendants contend that Plaintiff voluntarily
discontinued his case against Reilly-Benton when
Plaintiff's counsel stated in state court on July 23,
2018, that the only remaining defendants were Amchem and
Union Carbide and when Plaintiff did not include
Reilly-Benton in his proposed jury interrogatories, his
pretrial inserts, or ask his expert to make a finding of
liability as to Reilly-Benton. For the same reasons explained
above, Plaintiff's case against Reilly-Benton is stayed
due to its bankruptcy, not discontinued nor ...

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